Pool Re, the UK’s government-backed terrorism reinsurer, has outlined plans for its forthcoming non-damage business interruption (NDBI) cover, which is designed to protect businesses from interruption costs in the event of a terror attack even if their premises are not damaged.
If approved in Parliament, the new NDBI cover will include loss of trade caused by being unable to access, exit or use the insured’s premises because of the actions of the police of another statutory authority when responding to terrorist activity.
It will also provide cover for loss of business as a result of a downturn in customer footfall at insured businesses within a mile of a terrorist incident.
Currently, Pool Re can only cover losses from terrorism if there is physical damage to a policyholder’s premises, but the reinsurer has worked with the UK Government to change the originating legislation, the Reinsurance (Acts of Terrorism) Act 1993), which is currently going through Parliament.
The move would allow Pool Re to cover losses caused by an attack like the one at London Bridge where no premises were actually damaged, but which involved a wide police cordon.
“It’s a testament to the effectiveness of the relationship between government and the private sector that we are about to close a significant terrorism insurance gap for UK business,” said Pool Re Chief Executive Julian Enoizi.
“This gives confidence to the customers in the communities they serve that in the event of a terrorist attack, services can and will continue,” he added. “All commercial property and business owners will benefit from the proposed cover, particularly small- and medium-sized businesses which are particularly vulnerable to business interruption losses following attacks, as was seen last year in both Manchester and London.”
The details of Pool Re’s NDBI cover were outlined alongside its most recent annual Terrorism Threat & Mitigation Report, which analysed the key terrorist events and developments in 2018 and provided research into more than 4,300 global terrorist attacks since 2014.
Commenting on the findings, Enoizi said: “This statistical capability will strengthen Pool Re’s actuarial and modelling work, ultimately enabling our Members and reinsurers to feel more comfortable with terrorism risk over time, and therefore commit more of their own capital. In turn, this promotes the economic resilience of UK Plc, since awareness is raised and take-up levels increase.”
Speaking at the launch of the report in the City of London, Assistant Commissioner Neil Basu, the National Lead for UK Counter Terrorism Policing, added: “Pool Re is providing a huge opportunity to its members to assess, identify and mitigate their security weaknesses – this can only benefit society as a whole by improving the overall level of security, and provides a potential financial incentive to the individual business through the reduction of their insurance premium. I wholeheartedly support Pool Re’s commitment in this area.”
